Craftsman Automation IPO Review: Anil Singhvi decodes issue, reveals who should apply and who should not

Craftsman Automation IPO Review: Zee Business Managing Editor Anil Singhvi said that there are many companies in the Auto Ancillary space and Craftsman Automation is one among them. Anil Singhvi said that Craftsman Automation was incorporated on July 18, 1986, indicating it is an old company with good experience in markets. However, if there is no valuation comfort in an Auto Ancillary Company like Craftsman Automation, it is difficult to attract investors.

At the other end of spectrum are MTAR Technologies and Nazara Technologies, which are unique businesses and hence, they are commanding huge premiums and are getting higher valuations.

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Craftsman Automation IPO Review:

Craftsman Automation is not a bad company, says Sinhgvi but valuations are not attractive enough that investors may jump in to invest in the IPO. The valuations of Craftsman Automation are reasonable at the offer price.

आज खुलेगा क्राफ्ट्समैन ऑटोमेशन का IPO, क्या करें?

कंपनी में क्या पॉजिटिव, क्या निगेटिव?

अनिल सिंघवी- सिर्फ ज्यादा जोखिम लेने वाले निवेशकों को लंबी अवधि के लिए पैसे लगाने की सलाह#EditorsTake #CraftsmanAutomation #IPO @AnilSinghvi_ pic.twitter.com/22E3ZL6pwN

— Zee Business (@ZeeBusiness) March 15, 2021

As such, the Market Guru recommends that short term investors who expect listing gain in Craftsman Automation IPO should avoid it. Long term investors who are willing to take high risk and can accept tepid listing or 5-10% below issue price on listing can apply for the IPO. 

Singhvi said Peer Group companies like Endurance Technologies may be available at attractive valuation when compared to Craftsman Automation. So, investors are better off buying Endurance Technologies shares. This is just one example; there are many other Auto Ancillary companies whose valuations are attractive when compared to Craftsman Automation.

The clientele of Craftsman Automation is extremely strong; they have been into the business for 30 years. Reasonable valuations can be beneficial in the long term but not in the short term. The debt of the company is Rs 750 cr which is the key negative pointer. Singhvi said that Craftsman Automation is a Rs 1500 cr company with Rs 750 cr debt is not good.

Anil Singhsi said interaction with management of Craftsman Automation will further help to understand details about debt. Also, IPO proceeds will be used to partly reduce the debt of the company. Singhvi said that Debt is the key concern for the IPO.